For all their assertions of independent self-determination, most universities are actually run as if they were public-sector bodies.

This culture is reflected in their budgets, management systems and even academic organisation, while their employment practices and cost structures owe more to the Civil Service than competitive enterprise. Until now, this has not mattered too much, since public funding has grown steadily to match the rising costs of “core” teaching and research, sustaining a mutual dependency between government and universities that has benefited both. But that era is ending. The distinctions between the public and private markets for higher education services and provision are rapidly diminishing. Success in the new economics of higher education depends on providing tangible benefits for students, businesses and society – and doing that better than anyone else.

This is not simply a matter of universities becoming more businesslike and enterprising: they must first demonstrate what makes them special among the growing number of competitors. Universities must break out of the dependent mindset that asks: “Who will pay for us to continue doing the excellent things we do?” Instead, they must offer compelling answers to the market-led question: “How can our special capabilities be used to create value for others and thereby sustain our mission?”

Read full story.